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Investors are skittish right now, with markets tanking and ominous headlines dominating the media.In fact, some are even saying that there’s actually just one reason they’d be tempted to buy equities right now: they’re cheap!
Fear is moving markets right now, and here are the biggest worries on investors’ minds right now.
Fears about a downgrade of French sovereign debt have been moving markets all week.
France has long been the subject of downgrade speculation, but now the credit agencies are adding fuel to that fire. Meanwhile, yields on French bonds are blowing out.
HSBC Flash PMI fell to 48.0 from 51.1 for November, a 32-month low for the indicator. This is stoking fears of a hard landing for the Chinese economy.
The headlines we've seen about China's underground banking system over the last few months aren't helping things either.
Economic data has, on the whole, been beating expectations recently, however there are a few cracks in this painting.
Consumer sentiment and initial jobless claims misses this morning, an ominous economic surprise index, failure of the Congressional Supercommittee to reach a deal on deficit reduction, and a downward revision of Q3 GDP are just a few of the headlines thinking that the U.S. might actually be headed for a double-dip recession after all.
Despite forming a new national unity government, Greek lawmakers are still posing problems complicating disbursement of the next round of aid from the first bailout.
EU leaders led by German Chancellor Angela Merkel are demanding that Greek lawmakers sign a commitment to passing austerity measures before the aid will be disbersed. Conservative leader Antonis Samaris, however, says his party doesn't want to.
Greece is really coming down to the wire here, and must receive aid within 20 days to avoid default.
It is widely accepted that escalation of the eurozone crisis will have an effect on the U.S. financial system. However, Fitch dramatically escalated those fears when it released a report last week saying that U.S. banks stand to take a big hit if the economic situation in Europe gets any worse.
The eurozone is quickly fissuring into two different camps--those who believe that stronger action (European Central Bank monetization of sovereign debt, eurobonds, or some combination of the two) is necessary immediately, and those who want to wait for treaty change to fix the fiscal integration problems of the euro area.
France, the PIIGS, and many EU leaders are falling into the first camp, whereas Germany and the ECB are the staunch leaders of the second.
The International Monetary Fund is making lots of moves--particularly announcing a big credit line program yesterday--to try and convince markets it can bail out Europe, but no one really believes the Fund would be successful even if it tried.
What's more, U.S. lawmakers are worried that U.S. taxpayers will end up with the bill of any IMF expansion of IMF resources. The U.S. is the largest individual financier for the IMF, contributing 17.7% of its funds.
Capital shortfalls at Jefferies have spooked investors recently, and now ratings agency Egan-Jones is threatening another downgrade unless the investment bank can raise $1 billion.
The failure of a mid-market investment firm like Jefferies would escalate panic about Europe, and would probably provoke a sharp tightening in bank liquidity. Traders might also begin to speculate against firms similar to Jefferies--too small to be bailed out by the FDIC under current rules but nonetheless important to the financial sector.
organisation and structural problems are threatening to upend Bank of America.
The state of Bank of America's governance and finances is so bad right now that regulators are threatening enforcement action if management doesn't get its act together. Customers are planning to leave the bank after it threatened to hike debit card fees and take billions of dollars with them.
Europe--the centre of investor attention these days--does not take Thanksgiving! Sorry folks, but you could be eating turkey while squinting at your computer this year.
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